It was recently revealed that the UK arm of eBay paid only£1.6m in corporation tax. This is despite the US parent receiving a total revenue of £1 billion from their UK operations.
The UK accounts for eBay only record £200m of revenue. They came entirely from a Swiss parent company that seems to act as its advertising agency. Ebay declined to comment on how its UK revenues were not booked through its UK business.
However, an eBay spokesperson did say that their tax affairs were completely legal: “In all countries and at all times, eBay is fully compliant with national, EU and international tax rules including those of the OECD, including the remittance of VAT to the appropriate authorities.”
Ebay’s accounts show that their pre-tax profit in the UK last year was £7.7m. This was the figure with which the corporation tax was levied.
The UK arm of eBay is owned by eBay International which is based in Switzerland. This is owned by eBay in the US. The total revenues from the UK market included subsidiaries like the Stubhub ticket exchange and Gumtree classifieds site.
Amazon back taxes
This news comes after the recent revelation that the EU is intending to bill Amazon for back taxes. Amazon is facing a bill of hundreds of millions of euros from a tax deal they made with Luxembourg in 2003. This follows a three year investigation into tax arrangements between Amazon and Luxembourg.
Amazon said in a statement: “We are subject to the same tax laws as other companies operating here [in Luxembourg].”
Earlier this year Amazon saw a 50% drop in the amount of UK corporation tax it paid last year. At the same time, they recorded a 54% increase in turnover during the same period.
The decision to go after Amazon mirrors a simple stance taken by the European Commission when they levied a 13bn euro bill against Apple for Irish back taxes. Europe said that Ireland had given Apple illegal state aid with special tax arrangements. Apple is still appealing over this decision.
What do you think of the cases above? Should either company be paying more tax? Let us know your thoughts.